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DEFENDANTS PREVAILED IN A SUIT BY PLAINTFF COOPERATIVE PURSUANT TO A PROPRIETARY LEASE; THEREFORE DEFENDANTS WERE ENTITLED TO ATTORNEY’S FEES PURSUANT TO REAL PROPERTY LAW 234 EVEN THOUGH THE ISSUE WAS NOT RAISED IN A COUNTERCLAIM (SECOND DEPT).

The Second Department determined defendants, who prevailed in an action against them by plaintiff cooperative apartment corporation, was entitled to attorney’s fees pursuant to Real Property Law 234 even though that theory was not pled as a counterclaim:

As the prevailing parties to the action commenced against them by the plaintiff pursuant to the proprietary lease, which contained a provision entitling the plaintiff, as lessor, to attorney’s fees incurred in instituting an action against a lessee based on the lessee’s default, the defendants were entitled to attorney’s fees pursuant to Real Property Law § 234, which “provides for the reciprocal right of a lessee to recover an attorney’s fee when the same benefit is bestowed upon the lessor in the parties’ lease” … .

The defendants were entitled to an award of attorney’s fees pursuant to Real Property Law § 234, despite their failure to plead that cause of action as a counterclaim in their answer, since the evidence supported the claim and the plaintiff was not misled or prejudiced by their failure to plead the cause of action … . Round Dune, Inc. v Filkowski, 2021 NY Slip Op 04771, Second Dept 8-25-21

 

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SUPREME COURT PROPERLY REJECTED THE LANDLORD’S CALCULATION OF RENT OVERCHARGES FOR RENT-REGULATED APARTMENTS REMOVED FROM RENT STABILIZATION WHILE THE BUILDING WAS RECEIVING J-51 TAX BENEFITS (FIRST DEPT).

The First Department, over a dissent, determined Supreme Court properly refused to consider defendant landlord’s (Whitehouse’s) calculation of rent overcharges and ordered calculation by a referee. The landlord had removed rent-regulated apartments from rent stabilization while the building received J-51 tax benefits:

We find that the motion court correctly determined that plaintiffs’ legal regulated rent should be calculated according to the default formula set forth in RSC (9 NYCRR) § 2522.6(b). Although defendants may have been following the law in deregulating apartments during the period before Roberts [13 NY3d 270] was decided (see Regina, 35 NY3d at 356), their 2012 retroactive registration of the improperly deregulated apartments was an attempt to avoid the court’s adjudication of the issues and to impose their own rent calculations rather than face a determination of the legal regulated rent within the lookback period. Casey v Whitehouse Estates, Inc., 2021 NY Slip Op 04646, First Dept 8-5-21

 

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THE COVID-19 PANDEMIC DID NOT ENTITLE PLAINTIFF COMMERCIAL TENANT TO RENT ABATEMENT UNDER THE LEASE OR RESCISSION BASED UPON FRUSTRATION OF PURPOSE OR IMPOSSIBILITY (FIRST DEPT).

The First Department, reversing Supreme Court, determined that the COVID-19 pandemic did not entitle plaintiff to rent abatement under the lease and did support rescission of the lease based upon frustration of purpose or impossibility:

… [P]laintiff is not entitled to a rent abatement under the lease “due to loss of use of all or a portion of the Demised Premises due to [a] Casualty[.]” That portion of the lease refers to singular incidents causing physical damage to the premises and does not contemplate loss of use due to a pandemic or resulting government lockdown … . …

The doctrine of frustration of purpose does not apply as a matter of law where, as here, the tenant was not “completely deprived of the benefit of its bargain” (… 558 Seventh Ave. Corp. v Times Sq. Photo Inc., 194 AD3d 561 [1st Dept 2021] [finding that reduced revenues did not frustrate the purpose of the lease]). Furthermore, plaintiff’s assertion that Executive Order 202.8 [re: COVID-related suspension of laws] rendered it objectively impossible to perform its operations as a retail store as required by the lease is unavailing as defendant correctly points out that by the time plaintiff filed its complaint in July 2020, this was no longer the case … . Gap, Inc. v 170 Broadway Retail Owner, LLC, 2021 NY Slip Op 04115, First Dept 6-29-21

 

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PLAINTIFF’S COMPLAINT ALLEGING THE LANDLORD ENGAGED IN A FRAUDULENT SCHEME TO DEREGULATE APARMTENTS WAS PROPERLY DISMISSED (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Hinds-Radix, determined plaintiff’s complaint alleging the landlord engaged in a fraudulent scheme to deregulate apartments was properly dismissed. The opinion is too complex to fairly summarize here:

… [T]he deregulation of the plaintiff’s apartment was made in good faith … . Further, the late registration of the apartment as rent-stabilized, only after notification by the DHCR [Department of Housing and Community Renewal] of a change in the law several years in the making, does not indicate that [defendant landlord] was engaged in a fraudulent scheme to deregulate the apartment.

“Fraud consists of ‘evidence [of] a representation of material fact, falsity, scienter, reliance and injury'” … . The elements of fraud must be pleaded, and each element must be set forth in detail (see CPLR 3016[b] … ). That requirement was not met in this case.

There are instances in which failure to timely register an apartment as rent stabilized could constitute evidence of fraud. Prior to 2016, and the DHCR’s blanket notification to landlords of the change in the law, there were landlords involved in litigation over failure to register apartments as rent stabilized who nevertheless persisted in that practice … ; attempted to obfuscate the regulatory status of the apartment … ; pressured and misled tenants … ; or even went so far as to engage in misrepresentations as to whether improvements were in fact made … . It is clear that the plaintiff’s apartment was in fact rent stabilized, but that fact was not evidence of fraud, and allegations of fraud based upon speculation are insufficient … . Gridley v Turnbury Vil., LLC, 2021 NY Slip Op 03577, Second Dept 6-9-21

 

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PLAINTIFF, WHO WAS ASSAULTED IN DEFENDANT LANDLORD’S BUILDING, DID NOT RAISE A QUESTION OF FACT WHETHER THE ASSAILANT WAS AN INTRUDER, WHO ENTERED THROUGH AN ALLEGEDLY BROKEN DOOR, OR A TENANT OR AN INVITEE; IF THE ASSAILANT WERE A TENANT OR INVITEE, THE ALLEGEDLY BROKEN DOOR WOULD NOT BE A PROXIMATE CAUSE OF PLAINTIFF’S INJURY (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant landlord’s motion for summary judgment in this third-party assault case should have been granted. Although there was an issue of fact whether exterior doors to the apartment building were operable in the day plaintiff was assaulted, plaintiff did not raise a question of fact about whether the assailant was an intruder, as opposed to a tenant:

While plaintiff raised an issue of fact as to whether the building’s entrance doors were operable on the day of the incident, plaintiff failed to raise an issue of fact that the assailant was an intruder who gained access to the building through a negligently maintained entrance. Plaintiff testified that the assailant was masked and hooded, with only his eyes and the tip of his nose visible. Plaintiff admitted that she could not identify the assailant. Although plaintiff saw the assailant flee down the stairs, towards the 19th floor, she did not see him exit the building and does not know where he went … . Under the circumstances, no triable issue of fact exists because there is no evidence from which a jury could conclude, without pure speculation, that the assailant was an intruder, as opposed to a tenant or invitee … . Astupina v West Farms Sq. Hous. Dev. Fund Corp., 2021 NY Slip Op 03542, First Dept, 6-8-21

 

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THE NYS DIVISION OF HOUSING AND COMMUNITY RENEWAL (DHCR) PROPERLY HELD THE APARTMENT WAS RENT-STABILIZED, BUT DID NOT PROPERLY CALCULATE THE RENT OVERCHARGE (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined the NYS Division of Housing and Community Renewal (DHCR) properly found the apartment in question was rent-stabilized, but used the wrong formula to calculate the rent overcharge. The decision is too detailed to fairly summarize here:

Supreme Court correctly denied AEJ’s petition insofar as it seeks reversal of DHCR’s determination that the apartment is rent-stabilized. DHCR’s examination of the apartment’s rental history to determine its regulated status had a rational basis … . DHCR erred, however, in establishing the base date rent by using the last registered rent from 1990 and then adding subsequent rent-stabilized rent increases to bring it up to date as of March 2010. The rent history of the apartment beyond the four year look back should not have been examined to determine the base rent for overcharge purposes … . Rather the base date rent is what [the tenant] actually paid four years prior to the date when [the landlord] filed its request for administrative determination (AD request) with DHCR. Matter of AEJ 534 E. 88th, LLC v New York State Div. of Hous. & Community Renewal, 2021 NY Slip Op 02977, First Dept 5-11-21

 

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DEFENDANT PROPERTY OWNER DEMONSTRATED IT DID NOT CREATE OR HAVE ACTUAL NOTICE OF THE DANGEROUS CONDITION (A DEFECTIVE RAILING ON A SECOND-STORY BALCONY); HOWEVER, THERE WAS A QUESTION OF FACT WHETHER A LETTER FROM THE VILLAGE CODE ENFORCEMENT OFFICER SHOULD HAVE TRIGGERED AN INSPECTION OF THE PROPERTY (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined defendant’s motion for summary judgment dismissing the cause of action alleging defendant created or had actual notice of the dangerous condition should have been granted. The facts are not described, but apparently a railing on plaintiff’s second-story balcony gave way and he fell to the ground. However, the cause of action alleging defendant had constructive notice of the dangerous condition properly survived summary judgment. The defendant received a letter from the village code enforcement officer which did not specifically address the condition of the plaintiff’s balcony but was sufficient to trigger an inspection of the property:

Defendant met its initial burden on its motion of establishing that it did not create or have actual or constructive notice of the alleged defect in the second-story balcony … . In support of the motion, defendant submitted the deposition of plaintiff, who testified that he lived in the apartment for approximately 15 years prior to the accident and was unaware of a problem with the balcony railing. Defendant also submitted evidence establishing that it had received no complaints with respect to the condition of the railing and that it made no repairs to the railing prior to the accident.

In opposition to the motion, plaintiff raised an issue of fact whether defendant had constructive notice of the alleged defect in the balcony railing by submitting a letter written by the Village of Springville Code Enforcement Officer and sent to defendant. The letter, dated 10 days before the accident, stated that “the porch” with respect to the subject property was “falling apart” and needed “immediate attention,” and asked defendant to schedule a time for the Officer to inspect the property. Although defendant’s reply papers included an affidavit from the Code Enforcement Officer explaining that the letter referred to a first-story porch and not the second-story balcony, a person reading the Officer’s letter without any clarification would not have known specifically which porch the Officer had observed in disrepair. “The duty of landowners to inspect their property is measured by a standard of reasonableness under the circumstances” … , and we conclude that there is an issue of fact whether the information in the letter should have aroused defendant’s suspicion so as to trigger such a duty to inspect … . Maracle v Colin C. Hart Dev. Co., Inc., 2021 NY Slip Op 02939, Fourth Dept 5-7-21

 

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AFTER WALKING OVER A TRAP DOOR, PLAINTIFF STEPPED BACK AND FELL THROUGH THE OPEN DOOR; DEFENDANT OUT-OF-POSSESSION LANDLORD DEMONSTRATED IT DID NOT HAVE ACTUAL OR CONSTRUCTIVE NOTICE OF THE DANGEROUS CONDITION (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined that, although the lease did not unambiguously insulate the out-of-possession landlord from liability for plaintiff’s fall through an open trap door in a deli, the landlord demonstrated it did not have actual or constructive notice of the dangerous condition. Apparently plaintiff walked over the closed trap door but then stepped back and fell through the open door:

… [T]he owner failed to demonstrate, prima facie, that it was an out-of-possession landlord that did not have a contractual duty under the lease to maintain and repair the subject trapdoor … . “‘[W]hile the meaning of a contract is ordinarily a question of law, when a term or clause is ambiguous and the determination of the parties’ intent depends upon the credibility of extrinsic evidence or a choice among inferences to be drawn from extrinsic evidence, then the issue is one of fact'” … . Although paragraph 46 of the rider to the lease effectively limits the owner’s responsibility to “structural portions” of the deli, that phrase is only partially described in the lease, and is not so clear and unambiguous as to be subject only to the interpretation that it excludes the trapdoor … .

However, the owner established, prima facie, that it did not create the allegedly dangerous condition or have actual or constructive notice of its existence … . At his deposition, the plaintiff testified that he walked over the trapdoor, and then “seconds” later when he stepped back, he fell through a hole caused by the open trapdoor. Accordingly, even though the owner did not present evidence of the last time it inspected the trapdoor, the plaintiff’s testimony establishes lack of constructive notice as a matter of law … . In opposition, the plaintiff failed to raise a triable issue of fact. Although the owner’s representative testified at his deposition that he was aware of the existence and location of the trapdoor and went into the deli once a month to collect rent, a general awareness that customers could fall through an open trapdoor in the aisle of the deli is legally insufficient to constitute constructive notice of the particular condition that caused the plaintiff’s accident … . Vaughan v Triumphant Church of Jesus Christ, 2021 NY Slip Op 02560, Second Dept 4-28-21

 

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PLAINTIFF WAS RAPED IN DEFENDANTS’ BAR/RESTAURANT AND RAISED QUESTIONS OF FACT ABOUT THE ADEQUACY OF SECURITY AND THE FORESEEABILITY OF THE THIRD-PARTY ASSAULT; DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT SHOULD NOT HAVE BEEN GRANTED (FIRST DEPT).

The First Department, reversing Supreme Court, determined plaintiff’s third-party-assault-negligence action alleging inadequate security at defendant bar/restaurant should not have been dismissed. The building was owned by Harvard Agency and leased to Turnmill. Plaintiff was raped in a basement restroom. Plaintiff raised questions of fact by evidence a rape had occurred at a nearby bar owned by the same family, the bar was in a high crime area, and there were no security cameras in the basement:

Our courts have long held that “‘New York landowners owe people on their property a duty of reasonable care under the circumstances to maintain their property in a safe condition'” … . “Although landlords . . . have a common-law duty to minimize foreseeable dangers on their property, including the criminal acts of third parties, they are not the insurers of a visitor’s safety … . …

… [P]laintiff raised an issue of fact by pointing to evidence that Harvard was aware of another assault at a bar owned by the same family and located only a few blocks from Turnmill ( … [… ‘[t]here is no requirement . . . that the past experience relied on to establish foreseeability be of criminal activity at the exact location where plaintiff was harmed or that it be of the same type of criminal conduct to which plaintiff was subjected”]).

… [P]laintiff submitted a detailed expert affidavit indicating that the bar/restaurant was in a high crime area, and that the security employed was inadequate and a deviation from reasonable security standards … . Jane Doe v Turnmill LLC, 2021 NY Slip Op 02495, First Dept 4-27-21

 

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THE PROPERTY OWNERS DID NOT HAVE NOTICE OF THE ALLEGED DEFECT IN THE STOVE IN PLAINTIFF’S APARTMENT AND DID NOT HAVE A DUTY TO INSPECT THE STOVE AFTER THEY INSTALLED IT; THE PROPERTY OWNERS WERE ENTITLED TO SUMMARY JUDGMENT DISMISSING THE WRONGFUL DEATH ACTION STEMMING FROM A STOVE TOP FIRE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the appellant-landlords were entitled to summary judgment dismissing the wrongful death action stemming from a stove top fire. The plaintiff alleged the fire was caused by the faulty installation of the gas stove by the appellants. The appellants demonstrated they did not create or have actual or constructive notice of the alleged dangerous condition:

… [O]n their motion for summary judgment, the appellants established their prima facie entitlement to judgment as a matter of law by demonstrating that they did not create the condition alleged by installing the stove and that they did not have actual or constructive notice of that condition. Contrary to the plaintiff’s assertion, where, as here, there was nothing to arouse the appellants’ suspicion that there was an issue with the subject stove prior to the accident, the appellants had no duty to inspect the stove … . In opposition, the plaintiff failed to raise a triable issue of fact as to whether the appellants maintained the premises in a reasonably safe condition, including whether they breached any duty to inspect the stove after its installation. Vantroba v Zodiaco, 2021 NY Slip Op 02438, Second Dept 4-21-21

 

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